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Business and Policy Areas
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Proposed 1098-T Reporting Changes Highlighted at IRS Meeting

September 7, 2016

Joel Levenson, associate controller at the University of Central Florida and NACUBO’s representative to the Internal Revenue Service’s Information Reporting Program Advisory Committee (IRPAC), recently outlined for IRS officials some of the challenges and issues identified by colleges and universities in the August 2 notice of proposed rulemaking (NPRM) that makes modifications to Form 1098-T reporting requirements.

During the mid-August meeting of IRPAC, Levenson expressed gratitude to the IRS for the delay of implementation for mandated reporting of amounts paid for qualified tuition and expenses. He also discussed some of the more troublesome provisions included in the NPRM—in particular, new requirements that go beyond the statutory changes made last year

Levenson explained the potential institutional impact if the following provisions were adopted in the final rules:

  • A requirement to generate 1098-Ts for all of the following groups:
    • Nonresident aliens (who currently only need to report if requested).
    • Students whose qualified tuition and expenses are covered entirely with scholarships.
    • Students whose qualified tuition and expenses are paid under a formal billing arrangement.
  • A requirement to report the amount paid that related to an academic period that begins in the first three months of the next calendar year. Current rules require checking a box indicating that some amounts reported are for an academic period beginning during that time.
  • A requirement to report the number of months that a student was enrolled full time during the calendar year.
  • A requirement to state that payments received during the year, for tax reporting purposes, will first be treated as qualified tuition and expenses up to the amount billed, then as other nonqualified expenses.

Levenson’s takeaway from the meeting was that it would be valuable for the IRS to hear from individual colleges and universities and he urges institutions to craft their own comment letters to IRS and include the following information:

  • The increase in the number of 1098-Ts your institution would need to report if the proposed rules were adopted without changes. This will be helpful not only to identify the administrative burden on your institution, but will inform the IRS about how many more forms the Service would be faced with processing.
  • How much more will it cost your institution to generate the additional 1098-Ts?
  • Examples of how the proposed payment and refund priority assumptions may lead to confusion when compared to the student’s actual account activity.
  • Costs and amount of time that will be required to reprogram student information systems to implement new reporting items (e.g., number of months of full-time enrollment, amounts received for academic terms beginning in the following tax year, etc.).

NACUBO 1098-T Survey

To help NACUBO gather specific perspectives on 1098-T reporting and the potential impact of the proposed rules on institutions, a brief survey was sent out September 6. The questionnaire should not take more than 15 minutes to complete. If your campus did not receive a survey and would like to participate, please send an email to: NResearch@nacubo.org. Only one response per institution, please. The deadline for completion is September 16.  

NACUBO, working with members of the Student Financial Services Council and Tax Council, is developing comments to the IRS. Individual institutions are strongly encouraged to submit their own letters.  The deadline for comments is October 31.

Contact

Mary Bachinger
Director, Tax Policy
202.861.2581
E-mail